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The Effect of Sheriff’s Sales on Condominium Sub-Market Property Values

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  • Kashian, Russell
  • Carroll, Joseph D., Jr.
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    Abstract

    A challenge in analyzing the spillover impact of sheriff’s sales on neighboring properties is the recognition that housing markets are segmented. In this fashion, the large heterogeneous market of housing is broken down into small, more homogeneous segments, and buyers emerge that match their wants and needs with the product offered by the marketplace. It is clear that comparing the impact of sheriff’s sales of single-family homes to condominium prices ignores the idea of segmented markets. As a result, it is valuable to break down these markets by sector. By using a unique dataset on property sales, sheriff’s sales, and foreclosures for the City of Milwaukee from October 2005 to September 2009, we confirm that a single-family condominium foreclosure has a negative and significant impact on the sale of surrounding condominium units. The estimated impact decays with distance from the sheriff’s sale property and the length of time separating the two transactions, the most significant impact being a loss of 24% - 28% when the two units are sold within thirty days of one another and within the same building.

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    Bibliographic Info

    Article provided by Mid-Continent Regional Science Association in its journal Journal of Regional Analysis and Policy.

    Volume (Year): 41 (2011)
    Issue (Month): 1 ()
    Pages:

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    Handle: RePEc:ags:jrapmc:133148

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    Related research

    Keywords: Marketing; Risk and Uncertainty;

    References

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    1. Tammy Leonard & James Murdoch, 2009. "The neighborhood effects of foreclosure," Journal of Geographical Systems, Springer, vol. 11(4), pages 317-332, December.
    2. Bourassa, Steven C. & Hoesli, Martin & Peng, Vincent S., 2003. "Do housing submarkets really matter?," Journal of Housing Economics, Elsevier, vol. 12(1), pages 12-28, March.
    3. George J. Borjas, 2002. "Homeownership in the Immigrant Population," NBER Working Papers 8945, National Bureau of Economic Research, Inc.
    4. von Furstenberg, George M, 1970. "Risk Structures and the Distribution of Benefits within the FHA Home Mortgage Insurance Program," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 2(3), pages 303-22, August.
    5. Zhenguo Lin & Eric Rosenblatt & Vincent Yao, 2009. "Spillover Effects of Foreclosures on Neighborhood Property Values," The Journal of Real Estate Finance and Economics, Springer, vol. 38(4), pages 387-407, May.
    6. William H. Rogers, 2010. "Declining foreclosure neighborhood effects over time," Housing Policy Debate, Taylor & Francis Journals, vol. 20(4), pages 687-706, September.
    7. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
    8. Goodman, Allen C. & Thibodeau, Thomas G., 2008. "Where are the speculative bubbles in US housing markets?," Journal of Housing Economics, Elsevier, vol. 17(2), pages 117-137, June.
    9. von Furstenberg, George M, 1969. "Default Risk on FHA-Insured Home Mortgages as a Function of the Terms of Financing: A Quantitative Analysis," Journal of Finance, American Finance Association, vol. 24(3), pages 459-77, June.
    10. Allen, Marcus T & Springer, Thomas M & Waller, Neil G, 1995. "Implicit Pricing across Residential Rental Submarkets," The Journal of Real Estate Finance and Economics, Springer, vol. 11(2), pages 137-51, September.
    11. William H. Rogers & William Winter, 2009. "The Impact of Foreclosures on Neighboring Housing Sales," Journal of Real Estate Research, American Real Estate Society, vol. 31(4), pages 455-480.
    12. Charles W. Calomiris & Stanley D. Longhofer & William Miles, 2008. "The Foreclosure-House Price Nexus: Lessons from the 2007-2008 Housing Turmoil," NBER Working Papers 14294, National Bureau of Economic Research, Inc.
    13. von Furstenberg, George M & Green, R Jeffery, 1974. "Home Mortgage Delinquencies: A Cohort Analysis," Journal of Finance, American Finance Association, vol. 29(5), pages 1545-48, December.
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